Commentary Magazine


Topic: Citigroup

Flotsam and Jetsam

This is what desperation looks like: “Forget the myth of an Obama recovery. The past week has been disastrous for the White House and America’s increasingly disillusioned Left. No wonder the angry and desperate Vice President Joe Biden is talking about ‘playing hell’ if his party suffers defeat in November.”

This is what old-style politics sounds like: “White House senior adviser David Axelrod said the U.S. Chamber of Commerce has the burden of proving false the charge by Democrats that the business group is funneling foreign money to Republican campaigns. Axelrod was pressed by CBS’ Bob Schieffer on Sunday for evidence that the foreign campaign contributions benefiting the GOP is more than ‘peanuts.’  ‘Do you have any evidence that it’s not, Bob?’ Axelrod said on ‘Face the Nation.’  Ed Gillespie responded that it “was ‘an unbelievable mentality’ for Axelrod to assert charges about foreign contributions without backing them up.” It’s all too believable, unfortunately.

This is what a wave election looks like: “Democrats are buying advertising in places they hadn’t previously reserved it, a strong indication the battlefield is expanding. That includes New England, which hasn’t a single Republican House member. A new ad by the Democratic Congressional Campaign Committee began airing this week in the Massachusetts district covering Cape Cod, where Democratic Rep. Bill Delahunt is retiring and ex-police sergeant Jeff Perry is posting a strong GOP challenge.”

This is what a lousy TV appearance looks like: “Alexi Giannoulias, the Illinois Democrat running for President Obama’s old Senate seat, said Sunday that he wants to “reform” the president’s health care overhaul, and that the $814 billion stimulus was imperfect but that it prevented Americans from standing in soup lines. Giannoulias, who appeared on NBC’s ‘Meet the Press’ to debate Republican Mark Kirk, was on the defensive throughout the debate regarding Obama’s policies, as well as his past work for his family’s community bank and its ties to mob figures.”

This is what an eloquent first lady’s writing looks like: “Though some Afghan leaders have condemned the violence and defended the rights of women, others maintain a complicit silence in hopes of achieving peace. But peace attained by compromising the rights of half of the population will not last. Offenses against women erode security for all Afghans — men and women. And a culture that tolerates injustice against one group of its people ultimately fails to respect and value all its citizens.” Yeah, I miss her too.

This is what the GOP sounded like in 2006. “The chairman of the Democratic Congressional Campaign Committee brushed off various members’ ads touting opposition to President Obama and Speakers Nancy Pelosi (D-Calif.), saying that it simply shows the party is a big tent unlike the right.”

This is what “hope and change” looks like? “President Obama’s new National Security Advisor spent the decade prior to joining the White House as a legal advisor to powerful interests including Goldman Sachs and Citigroup, and as a lobbyist for Fannie Mae, where he oversaw the mortgage giant’s aggressive campaign to undermine the credibility of a probe into its accounting irregularities, according to government reports and public disclosure forms. … While housing sales were still booming, internally these were troubled years for the company. In a report first noted by ABC News in 2008, Donilon is described as someone who lobbied for and helped paint a rosy picture of Fannie Mae’s financial health to the company’s board. He did so at a time when Fannie Mae faced accusations that it was misstating its earnings from 1998 to 2004.”

This is what a flaky candidate sounds like: “Jerry Brown: Mammograms not effective.”

This is what desperation looks like: “Forget the myth of an Obama recovery. The past week has been disastrous for the White House and America’s increasingly disillusioned Left. No wonder the angry and desperate Vice President Joe Biden is talking about ‘playing hell’ if his party suffers defeat in November.”

This is what old-style politics sounds like: “White House senior adviser David Axelrod said the U.S. Chamber of Commerce has the burden of proving false the charge by Democrats that the business group is funneling foreign money to Republican campaigns. Axelrod was pressed by CBS’ Bob Schieffer on Sunday for evidence that the foreign campaign contributions benefiting the GOP is more than ‘peanuts.’  ‘Do you have any evidence that it’s not, Bob?’ Axelrod said on ‘Face the Nation.’  Ed Gillespie responded that it “was ‘an unbelievable mentality’ for Axelrod to assert charges about foreign contributions without backing them up.” It’s all too believable, unfortunately.

This is what a wave election looks like: “Democrats are buying advertising in places they hadn’t previously reserved it, a strong indication the battlefield is expanding. That includes New England, which hasn’t a single Republican House member. A new ad by the Democratic Congressional Campaign Committee began airing this week in the Massachusetts district covering Cape Cod, where Democratic Rep. Bill Delahunt is retiring and ex-police sergeant Jeff Perry is posting a strong GOP challenge.”

This is what a lousy TV appearance looks like: “Alexi Giannoulias, the Illinois Democrat running for President Obama’s old Senate seat, said Sunday that he wants to “reform” the president’s health care overhaul, and that the $814 billion stimulus was imperfect but that it prevented Americans from standing in soup lines. Giannoulias, who appeared on NBC’s ‘Meet the Press’ to debate Republican Mark Kirk, was on the defensive throughout the debate regarding Obama’s policies, as well as his past work for his family’s community bank and its ties to mob figures.”

This is what an eloquent first lady’s writing looks like: “Though some Afghan leaders have condemned the violence and defended the rights of women, others maintain a complicit silence in hopes of achieving peace. But peace attained by compromising the rights of half of the population will not last. Offenses against women erode security for all Afghans — men and women. And a culture that tolerates injustice against one group of its people ultimately fails to respect and value all its citizens.” Yeah, I miss her too.

This is what the GOP sounded like in 2006. “The chairman of the Democratic Congressional Campaign Committee brushed off various members’ ads touting opposition to President Obama and Speakers Nancy Pelosi (D-Calif.), saying that it simply shows the party is a big tent unlike the right.”

This is what “hope and change” looks like? “President Obama’s new National Security Advisor spent the decade prior to joining the White House as a legal advisor to powerful interests including Goldman Sachs and Citigroup, and as a lobbyist for Fannie Mae, where he oversaw the mortgage giant’s aggressive campaign to undermine the credibility of a probe into its accounting irregularities, according to government reports and public disclosure forms. … While housing sales were still booming, internally these were troubled years for the company. In a report first noted by ABC News in 2008, Donilon is described as someone who lobbied for and helped paint a rosy picture of Fannie Mae’s financial health to the company’s board. He did so at a time when Fannie Mae faced accusations that it was misstating its earnings from 1998 to 2004.”

This is what a flaky candidate sounds like: “Jerry Brown: Mammograms not effective.”

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Stop the Presses! John Boehner Sleeps, Eats, and Breathes

If you’d like to know why the New York Times – once an order of magnitude above any other paper in the country — is in such trouble today, look no further than today’s front-page story on John Boehner, the House minority leader. Appearing above the fold on page one, it fills up most of a page inside.

It seems — are you sitting down? — as though John Boehner deals with lobbyists. The shock! The horror! After reporting on a meeting with lobbyists regarding the bank-regulations bill that passed earlier this year, for instance, the article reads:

That sort of alliance — they won a few skirmishes, though they lost the war on the regulatory bill — is business as usual for Mr. Boehner, the House minority leader and would-be speaker if Republicans win the House in November. He maintains especially tight ties with a circle of lobbyists and former aides representing some of the nation’s biggest businesses, including Goldman Sachs, Google, Citigroup, R. J. Reynolds, MillerCoors and UPS.

It is, of course, equally business as usual for all congressional leaders, Republican and Democrat alike. Members of Congress deal with lobbyists every day of their professional lives, striking alliances, raising money, seeking to influence public opinion and thus win votes in Congress. The Times, in effect, is accusing Mr. Boehner of practicing politics.

The story is astonishingly thin. Are his ties to lobbyists “especially tight”? Who knows? The Times gives no examples whatever of the dealings of other Congressional leaders with lobbyists. The Times writes, “From 2000 to 2007, Mr. Boehner flew at least 45 times, often with his wife, Debbie, on corporate jets provided by companies including R. J. Reynolds. (As required, Mr. Boehner reimbursed part of the costs.)” So he didn’t do anything against House rules, apparently. But how does his aeronautical hitchhiking compare with, say, that of Steny Hoyer, the Democratic majority leader, or Sander Levin, the Chairman of the Ways and Means Committee? The Times doesn’t bother to say, which raises the suspicion that Democratic leaders like flying around in private jets about as much as Republican ones do. To paraphrase Mrs. August Belmont, who, a century ago, was talking about private railroad cars, “A private jet is not an acquired taste. One takes to it immediately.”

The lede in the online edition of the story gives the game away. “As Democrats try to cast John A. Boehner of Ohio, the House minority leader, as the face of the Republican Party, his ties to lobbyists are under attack.” Of course, under House rules, the Speaker is nearly all-powerful and the minority party, and thus its leader, have almost no power. They are nearly irrelevant to the legislative process in the House. So it’s going to be up-hill work trying to make Boehner into the Republican Nancy Pelosi.

This article, which alleges no wrongdoing and gives no comparisons, is simply an attempt to further the Democrats’ plan to demonize Boehner. It is water carrying, plain and simple, proving only that the Times’s ties with the Democratic Party are especially tight.

If you’d like to know why the New York Times – once an order of magnitude above any other paper in the country — is in such trouble today, look no further than today’s front-page story on John Boehner, the House minority leader. Appearing above the fold on page one, it fills up most of a page inside.

It seems — are you sitting down? — as though John Boehner deals with lobbyists. The shock! The horror! After reporting on a meeting with lobbyists regarding the bank-regulations bill that passed earlier this year, for instance, the article reads:

That sort of alliance — they won a few skirmishes, though they lost the war on the regulatory bill — is business as usual for Mr. Boehner, the House minority leader and would-be speaker if Republicans win the House in November. He maintains especially tight ties with a circle of lobbyists and former aides representing some of the nation’s biggest businesses, including Goldman Sachs, Google, Citigroup, R. J. Reynolds, MillerCoors and UPS.

It is, of course, equally business as usual for all congressional leaders, Republican and Democrat alike. Members of Congress deal with lobbyists every day of their professional lives, striking alliances, raising money, seeking to influence public opinion and thus win votes in Congress. The Times, in effect, is accusing Mr. Boehner of practicing politics.

The story is astonishingly thin. Are his ties to lobbyists “especially tight”? Who knows? The Times gives no examples whatever of the dealings of other Congressional leaders with lobbyists. The Times writes, “From 2000 to 2007, Mr. Boehner flew at least 45 times, often with his wife, Debbie, on corporate jets provided by companies including R. J. Reynolds. (As required, Mr. Boehner reimbursed part of the costs.)” So he didn’t do anything against House rules, apparently. But how does his aeronautical hitchhiking compare with, say, that of Steny Hoyer, the Democratic majority leader, or Sander Levin, the Chairman of the Ways and Means Committee? The Times doesn’t bother to say, which raises the suspicion that Democratic leaders like flying around in private jets about as much as Republican ones do. To paraphrase Mrs. August Belmont, who, a century ago, was talking about private railroad cars, “A private jet is not an acquired taste. One takes to it immediately.”

The lede in the online edition of the story gives the game away. “As Democrats try to cast John A. Boehner of Ohio, the House minority leader, as the face of the Republican Party, his ties to lobbyists are under attack.” Of course, under House rules, the Speaker is nearly all-powerful and the minority party, and thus its leader, have almost no power. They are nearly irrelevant to the legislative process in the House. So it’s going to be up-hill work trying to make Boehner into the Republican Nancy Pelosi.

This article, which alleges no wrongdoing and gives no comparisons, is simply an attempt to further the Democrats’ plan to demonize Boehner. It is water carrying, plain and simple, proving only that the Times’s ties with the Democratic Party are especially tight.

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RE: Showboating Against Wall Street Greed

Maybe the Democrats overplayed their hand. The Washington Post editors are grimacing:

The broader implication raised by senators at Tuesday’s hearing — that Goldman somehow rigged the market in subprime mortgages, and that this led to the meltdown — does not strike us as a terribly useful or even accurate analysis of the crisis. Yes, in its capacity as a market-maker, the firm sold complex derivatives to market players who wanted to bet on a rosy view of housing long after Goldman had turned more pessimistic. To that extent, Goldman’s interest in short-term revenue clashed with what, in hindsight, was society’s need for a whistle-blower. For the most part, though, these were large, sophisticated institutional investors who had the opportunity to conduct the same analysis of economic data that Goldman did. They knew that there was someone on the short side of every trade. And Goldman had no legal obligation to trade in the same direction as these clients did. Indeed, if it had, then Goldman could not have started hedging its own bets on housing early, as it did. The firm would have lost billions, and it might have wound up needing an even bigger bailout by U.S. taxpayers than it actually got. It could have ended up like Citigroup, which tried to ride the bubble until it was too late and had to be propped up with hundreds of billions of dollars in federal cash and credit guarantees.

As the editors note, the senators seemed outraged — offended even — by the entire notion of short-selling, although even senators must understand at some level that short-selling is, in essence, the way information is transmitted to the marketplace that the herd is going in the wrong direction. (“Perhaps the housing bubble would have been mitigated if more shorts had piled in earlier.”) But the senators would not be deterred from their attacks, in part because the underlying merits of the actual case against Goldman are looking more suspect.

Others observe:

The SEC claims that Goldman’s Fabrice Tourre misled ACA into thinking Mr. Paulson’s firm would be going long on subprime, just like ACA. It’s not clear that this would have mattered, but Mr. Tourre flatly denied the allegation under oath yesterday.

The SEC also claims Goldman should have disclosed that Mr. Paulson’s firm suggested some of the particular mortgage-backed securities on which the two sides in the transaction would bet. Yet Mr. Tourre testified that the pool referenced in the transaction performed no worse than similar pools of subprime loans not included in the transaction.

In sum, it appeared to be another bad day for the SEC’s specific case against Goldman. But lawmakers seemed intent on finding the firm generally guilty of meeting institutional demand for subprime housing risk.

Well, you can see why the senators would rather talk about greed — or anything other than the merits of what seems to be a flaky case with highly suspicious timing.

Once again, lawmakers are betting the voters are easily bamboozled and can be lured into an anti-business, anti-bank fury. They may be right. But if the Post’s editors are any guide, they may have underestimated the public’s ability to see through their histrionics.

Maybe the Democrats overplayed their hand. The Washington Post editors are grimacing:

The broader implication raised by senators at Tuesday’s hearing — that Goldman somehow rigged the market in subprime mortgages, and that this led to the meltdown — does not strike us as a terribly useful or even accurate analysis of the crisis. Yes, in its capacity as a market-maker, the firm sold complex derivatives to market players who wanted to bet on a rosy view of housing long after Goldman had turned more pessimistic. To that extent, Goldman’s interest in short-term revenue clashed with what, in hindsight, was society’s need for a whistle-blower. For the most part, though, these were large, sophisticated institutional investors who had the opportunity to conduct the same analysis of economic data that Goldman did. They knew that there was someone on the short side of every trade. And Goldman had no legal obligation to trade in the same direction as these clients did. Indeed, if it had, then Goldman could not have started hedging its own bets on housing early, as it did. The firm would have lost billions, and it might have wound up needing an even bigger bailout by U.S. taxpayers than it actually got. It could have ended up like Citigroup, which tried to ride the bubble until it was too late and had to be propped up with hundreds of billions of dollars in federal cash and credit guarantees.

As the editors note, the senators seemed outraged — offended even — by the entire notion of short-selling, although even senators must understand at some level that short-selling is, in essence, the way information is transmitted to the marketplace that the herd is going in the wrong direction. (“Perhaps the housing bubble would have been mitigated if more shorts had piled in earlier.”) But the senators would not be deterred from their attacks, in part because the underlying merits of the actual case against Goldman are looking more suspect.

Others observe:

The SEC claims that Goldman’s Fabrice Tourre misled ACA into thinking Mr. Paulson’s firm would be going long on subprime, just like ACA. It’s not clear that this would have mattered, but Mr. Tourre flatly denied the allegation under oath yesterday.

The SEC also claims Goldman should have disclosed that Mr. Paulson’s firm suggested some of the particular mortgage-backed securities on which the two sides in the transaction would bet. Yet Mr. Tourre testified that the pool referenced in the transaction performed no worse than similar pools of subprime loans not included in the transaction.

In sum, it appeared to be another bad day for the SEC’s specific case against Goldman. But lawmakers seemed intent on finding the firm generally guilty of meeting institutional demand for subprime housing risk.

Well, you can see why the senators would rather talk about greed — or anything other than the merits of what seems to be a flaky case with highly suspicious timing.

Once again, lawmakers are betting the voters are easily bamboozled and can be lured into an anti-business, anti-bank fury. They may be right. But if the Post’s editors are any guide, they may have underestimated the public’s ability to see through their histrionics.

Read Less

Flotsam and Jetsam

The party of “no” is ahead in the congressional generic poll.

All that time “engaging” Iran was supposed to prepare the ground for international sanctions. But China and Russia are as unhelpful as ever. China sent only a low-level flunky to the international meeting: “China’s virtual snub has caused consternation among the four Western powers in the group, which had hoped to use the meeting to reach an agreement on whether to begin drafting a Security Council resolution on a fourth round of U.N. sanctions against Tehran.” And Russia thinks there is “still time for meaningful political engagement and efforts to find a solution.” I wonder if the Czech Republic and Poland can get their missile-defense systems back now.

Martha Coakley tells the Big Lie the weekend before the election, accusing Scott Brown of wanting to turn away rape victims from hospitals. It is so ludicrous and false (even by Boston Globe standards) that one wonders if that will be the final nail in her coffin.

More bad polling news for Coakley suggests that she was desperate to throw the long bomb.

Let’s get this straight: if ObamaCare proves to be so unpopular that Massachusetts sends a Republican to the Senate, the Democrats will try to force the hugely unpopular bill through with a bare 51-vote majority? Yup: “Democrats are prepared to use a budgetary procedure to pass healthcare reform legislation if they lose a key Senate race on Tuesday, a House leader said this weekend. … Senate Democrats had previously ruled out using reconciliation, reasoning that the maneuver was politically and procedurally risky. The tactic, for instance, leaves it up to the Senate parliamentarian to decide whether elements of the bill under consideration are relevant to the budget process, risking reforms seen as critical to Democrats’ reform efforts.” There is no reason to ever listen to the voters, they must figure.

Is there any wonder that there’s an “enthusiasm gap” in Massachusetts?

Obama is now resorting to good old-fashioned business-bashing: “The White House has spent months imploring banks to lend more money, so will President Obama’s new proposal to extract $117 billion from bank capital encourage new bank lending? Just asking. Welcome to one more installment in Washington’s year-long crusade to revive private business by assailing and soaking it. Mr. Obama’s new ‘Financial Crisis Responsibility Fee’—please don’t call it a tax—is being sold as a way to cover expected losses in the Troubled Asset Relief Program. That sounds reasonable, except that the banks designated to pay the fee aren’t those responsible for the losses. With the exception of Citigroup, those banks have repaid their TARP money with interest.”

Dana Milbank chides the Democrats for meeting in a bunker but then regurgitates the mind-numbingly silly and unsubstantiated mantra that has sent them marching over the political cliff: “They can pass health-care reform and have a losing year, or they can shelve health-care reform and have a disastrous year. Voters may not like the health-care bill, but they’ll punish the majority party even more for dithering and drifting without accomplishing anything.” Actually, I think they’re punishing them for ignoring the voters’ clear message.

The party of “no” is ahead in the congressional generic poll.

All that time “engaging” Iran was supposed to prepare the ground for international sanctions. But China and Russia are as unhelpful as ever. China sent only a low-level flunky to the international meeting: “China’s virtual snub has caused consternation among the four Western powers in the group, which had hoped to use the meeting to reach an agreement on whether to begin drafting a Security Council resolution on a fourth round of U.N. sanctions against Tehran.” And Russia thinks there is “still time for meaningful political engagement and efforts to find a solution.” I wonder if the Czech Republic and Poland can get their missile-defense systems back now.

Martha Coakley tells the Big Lie the weekend before the election, accusing Scott Brown of wanting to turn away rape victims from hospitals. It is so ludicrous and false (even by Boston Globe standards) that one wonders if that will be the final nail in her coffin.

More bad polling news for Coakley suggests that she was desperate to throw the long bomb.

Let’s get this straight: if ObamaCare proves to be so unpopular that Massachusetts sends a Republican to the Senate, the Democrats will try to force the hugely unpopular bill through with a bare 51-vote majority? Yup: “Democrats are prepared to use a budgetary procedure to pass healthcare reform legislation if they lose a key Senate race on Tuesday, a House leader said this weekend. … Senate Democrats had previously ruled out using reconciliation, reasoning that the maneuver was politically and procedurally risky. The tactic, for instance, leaves it up to the Senate parliamentarian to decide whether elements of the bill under consideration are relevant to the budget process, risking reforms seen as critical to Democrats’ reform efforts.” There is no reason to ever listen to the voters, they must figure.

Is there any wonder that there’s an “enthusiasm gap” in Massachusetts?

Obama is now resorting to good old-fashioned business-bashing: “The White House has spent months imploring banks to lend more money, so will President Obama’s new proposal to extract $117 billion from bank capital encourage new bank lending? Just asking. Welcome to one more installment in Washington’s year-long crusade to revive private business by assailing and soaking it. Mr. Obama’s new ‘Financial Crisis Responsibility Fee’—please don’t call it a tax—is being sold as a way to cover expected losses in the Troubled Asset Relief Program. That sounds reasonable, except that the banks designated to pay the fee aren’t those responsible for the losses. With the exception of Citigroup, those banks have repaid their TARP money with interest.”

Dana Milbank chides the Democrats for meeting in a bunker but then regurgitates the mind-numbingly silly and unsubstantiated mantra that has sent them marching over the political cliff: “They can pass health-care reform and have a losing year, or they can shelve health-care reform and have a disastrous year. Voters may not like the health-care bill, but they’ll punish the majority party even more for dithering and drifting without accomplishing anything.” Actually, I think they’re punishing them for ignoring the voters’ clear message.

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The Health-Care Backlash

Here are some thoughts on where things stand in the aftermath of the certain passage of the Senate health-care bill.

1. Few Democrats understand the depth and intensity of opposition that exists toward them and their agenda, especially regarding health care. Passage of this bill will only heighten the depth and intensity of the opposition. We’re seeing a political tsunami in the making, and passage of health-care legislation would only add to its size and force.

2. This health-care bill may well be historic, but not in the way the president thinks. I’m not sure we’ve ever seen anything quite like it: passage of a mammoth piece of legislation, hugely expensive and unpopular, on a strict party-line vote taken in a rush of panic because Democrats know that the more people see of ObamaCare, the less they like it.

3. The problem isn’t simply with how substantively awful the bill is but how deeply dishonest and (legally) corrupt the whole process has been. There’s already a powerful populist, anti-Washington sentiment out there, perhaps as strong as anything we’ve seen. This will add kerosene to that raging fire.

4. Democrats have sold this bill as a miracle-worker; when people see first-hand how pernicious health-care legislation will be, abstract concerns will become concrete. That will magnify the unhappiness of the polity.

5. The collateral damage to Obama from this bill is enormous. More than any candidate in our lifetime, Obama won based on the aesthetics of politics. It wasn’t because of his record; he barely had one. And it wasn’t because of his command of policy; few people knew what his top three policy priorities were. It was based instead on the sense that he was something novel, the embodiment of a “new politics” – mature, high-minded and gracious, intellectually serious. That was the core of his speeches and his candidacy. In less than a year, that core has been devoured, most of all by this health-care process.

Mr. Obama has shown himself to be a deeply partisan and polarizing figure. (“I have never been asked to engage in a single serious negotiation on any issue, nor has any other Republican,” Senator McCain reported over the weekend.) The lack of transparency in this process has been unprecedented and bordering on criminal. The president has been deeply misleading in selling this plan. Lobbyists, a bane of Obama during the campaign, are having a field day.

President Obama may succeed in passing a terribly unpopular piece of legislation – but in the process, he has shattered his carefully cultivated image. It now consists of a thousand shards.

6. This health-care bill shouldn’t be seen in isolation. It’s part of a train of events that include the stimulus package, the omnibus spending bill (complete with some 8,500 earmarks), and a record-sized budget. In addition, as Jim Manzi points out in the new issue of National Affairs:

[Under Obama] the federal government has also intervened aggressively in both the financial and industrial sectors of the economy in order to produce specific desired outcomes for particular corporations. It has nationalized America’s largest auto company (General Motors) and intervened in the bankruptcy proceedings of the third-largest auto company (Chrysler), privileging labor unions at the expense of bondholders. It has, in effect, nationalized what was America’s largest insurance company (American International Group) and largest bank (Citigroup), and appears to have exerted extra-legal financial pressure on what was the second-largest bank (Bank of America) to get it to purchase the ­country’s largest securities company (Merrill Lynch). The implicit government guarantees provided to home-loan giants Fannie Mae and Freddie Mac have been called in, and the federal government is now the largest de facto lender in the residential real-estate market. The government has selected the CEOs and is setting compensation at major automotive and financial companies across the country. On top of these interventions in finance and commerce, the administration and congressional Democrats are also pursuing both a new climate and energy strategy and large-scale health-care reform. Their agenda would place the government at the center of these two huge sectors of the economy…

Together, these actions tell quite a tale. Mr. Obama has revived the worst impressions of the Democratic party – profligate and undisciplined, arrogant, lovers of big government, increasers of taxes. The issues and narrative for American politics in the foreseeable future has been set — limited government versus exploding government, capitalism versus European style socialism, responsible and measured policies versus reckless and radical ones.

Barack Obama is in the process of inflicting enormous damage to his presidency and his party. And there is more, much more to come.

Here are some thoughts on where things stand in the aftermath of the certain passage of the Senate health-care bill.

1. Few Democrats understand the depth and intensity of opposition that exists toward them and their agenda, especially regarding health care. Passage of this bill will only heighten the depth and intensity of the opposition. We’re seeing a political tsunami in the making, and passage of health-care legislation would only add to its size and force.

2. This health-care bill may well be historic, but not in the way the president thinks. I’m not sure we’ve ever seen anything quite like it: passage of a mammoth piece of legislation, hugely expensive and unpopular, on a strict party-line vote taken in a rush of panic because Democrats know that the more people see of ObamaCare, the less they like it.

3. The problem isn’t simply with how substantively awful the bill is but how deeply dishonest and (legally) corrupt the whole process has been. There’s already a powerful populist, anti-Washington sentiment out there, perhaps as strong as anything we’ve seen. This will add kerosene to that raging fire.

4. Democrats have sold this bill as a miracle-worker; when people see first-hand how pernicious health-care legislation will be, abstract concerns will become concrete. That will magnify the unhappiness of the polity.

5. The collateral damage to Obama from this bill is enormous. More than any candidate in our lifetime, Obama won based on the aesthetics of politics. It wasn’t because of his record; he barely had one. And it wasn’t because of his command of policy; few people knew what his top three policy priorities were. It was based instead on the sense that he was something novel, the embodiment of a “new politics” – mature, high-minded and gracious, intellectually serious. That was the core of his speeches and his candidacy. In less than a year, that core has been devoured, most of all by this health-care process.

Mr. Obama has shown himself to be a deeply partisan and polarizing figure. (“I have never been asked to engage in a single serious negotiation on any issue, nor has any other Republican,” Senator McCain reported over the weekend.) The lack of transparency in this process has been unprecedented and bordering on criminal. The president has been deeply misleading in selling this plan. Lobbyists, a bane of Obama during the campaign, are having a field day.

President Obama may succeed in passing a terribly unpopular piece of legislation – but in the process, he has shattered his carefully cultivated image. It now consists of a thousand shards.

6. This health-care bill shouldn’t be seen in isolation. It’s part of a train of events that include the stimulus package, the omnibus spending bill (complete with some 8,500 earmarks), and a record-sized budget. In addition, as Jim Manzi points out in the new issue of National Affairs:

[Under Obama] the federal government has also intervened aggressively in both the financial and industrial sectors of the economy in order to produce specific desired outcomes for particular corporations. It has nationalized America’s largest auto company (General Motors) and intervened in the bankruptcy proceedings of the third-largest auto company (Chrysler), privileging labor unions at the expense of bondholders. It has, in effect, nationalized what was America’s largest insurance company (American International Group) and largest bank (Citigroup), and appears to have exerted extra-legal financial pressure on what was the second-largest bank (Bank of America) to get it to purchase the ­country’s largest securities company (Merrill Lynch). The implicit government guarantees provided to home-loan giants Fannie Mae and Freddie Mac have been called in, and the federal government is now the largest de facto lender in the residential real-estate market. The government has selected the CEOs and is setting compensation at major automotive and financial companies across the country. On top of these interventions in finance and commerce, the administration and congressional Democrats are also pursuing both a new climate and energy strategy and large-scale health-care reform. Their agenda would place the government at the center of these two huge sectors of the economy…

Together, these actions tell quite a tale. Mr. Obama has revived the worst impressions of the Democratic party – profligate and undisciplined, arrogant, lovers of big government, increasers of taxes. The issues and narrative for American politics in the foreseeable future has been set — limited government versus exploding government, capitalism versus European style socialism, responsible and measured policies versus reckless and radical ones.

Barack Obama is in the process of inflicting enormous damage to his presidency and his party. And there is more, much more to come.

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Re: A Democratic Theme Emerges

Daniel, here’s what I don’t get: For decades, following FDR’s lead, Democrats mostly focused their anti-business fire on banks. Evil banks. Terrible banks. Here we are in 2008, there is a financial crisis, and the crisis is largely due to the behavior of banks. So why aren’t Democrats attacking banks? One theory about Mrs. Clinton: Hillary can’t because Citigroup is the home of her chief economic adviser, Robert Rubin, who was her husband’s Treasury Secretary.

Daniel, here’s what I don’t get: For decades, following FDR’s lead, Democrats mostly focused their anti-business fire on banks. Evil banks. Terrible banks. Here we are in 2008, there is a financial crisis, and the crisis is largely due to the behavior of banks. So why aren’t Democrats attacking banks? One theory about Mrs. Clinton: Hillary can’t because Citigroup is the home of her chief economic adviser, Robert Rubin, who was her husband’s Treasury Secretary.

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Sovereign Wealth Funds

Brian Williams of NBC asked the Democrats a substantive and a provocative question about sovereign wealth funds — giant pools of money controlled and managed by foreign governments like China, Singapore, and Gulf oil states — investing in American companies like Merrill Lynch and Citigroup. This issue will be a rallying point for the protectionist left and right this campaign season. John Edwards and Hillary Clinton gave a lot of boiler point about more transparency and the need to do something. Barack Obama, clearly knowing nothing about the topic, talked about alternative energy.

But the U.S. attitude toward sovereign wealth funds is going to be the most important test of American acceptance of globalization. By this fall, there will be many more companies that get their funding from government investment funds from the Gulf State, Singapore, and China. Irwin Stelzer has made the best case for being wary about having a foreign government holding the purse strings of American businesses. But the fact is, these funds are going to be the most important engine of finance and growth capital in a global economy whether we like it or not. As a political matter, this is probably a losing issue for free traders. Yet all those politicians who want to deter foreign financial investment in American companies have to tell us what Citi, and Merrill, and all the other cash-strapped companies should do when they need to find new sources of capital if they can’t get access to these pools of wealth.

Brian Williams of NBC asked the Democrats a substantive and a provocative question about sovereign wealth funds — giant pools of money controlled and managed by foreign governments like China, Singapore, and Gulf oil states — investing in American companies like Merrill Lynch and Citigroup. This issue will be a rallying point for the protectionist left and right this campaign season. John Edwards and Hillary Clinton gave a lot of boiler point about more transparency and the need to do something. Barack Obama, clearly knowing nothing about the topic, talked about alternative energy.

But the U.S. attitude toward sovereign wealth funds is going to be the most important test of American acceptance of globalization. By this fall, there will be many more companies that get their funding from government investment funds from the Gulf State, Singapore, and China. Irwin Stelzer has made the best case for being wary about having a foreign government holding the purse strings of American businesses. But the fact is, these funds are going to be the most important engine of finance and growth capital in a global economy whether we like it or not. As a political matter, this is probably a losing issue for free traders. Yet all those politicians who want to deter foreign financial investment in American companies have to tell us what Citi, and Merrill, and all the other cash-strapped companies should do when they need to find new sources of capital if they can’t get access to these pools of wealth.

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America’s New CEO’s

As the Republican presidential candidates compete to see who can bash immigrants the hardest, Citigroup has just appointed Vikram Pandit, a super-smart financier born in India, to be its CEO. As this New York Times article notes, he joins thirteen other CEO’s of Fortune 500 companies who were not born in this country: “The head of the Altria Group was born in Egypt, for example. PepsiCo’s is from India, the Liberty Mutual Group’s is a native of Ireland, and Alcoa’s was born in Morocco.”

Perhaps one of the GOP candidates can cut a TV spot bemoaning lost jobs for American plutocrats and promising that in his administration WASP’s will regain their rightful places atop the corporate hierarchy.

Actually, the fact that the top management jobs are no longer the exclusive preserve of the proverbial man in the gray flannel suit is good news. It means that American companies are doing a great job of drawing on talent from all around the world. In the short term, of course, that can be disorienting and aggravating for the clubby golfing types who had come to look on top-level corporate jobs as theirs almost by divine right. In the long term, however, it means that American companies will be more competitive than insular rivals in other countries, thereby making this country even more prosperous and vital. Something similar is happening on lower rungs of the socio-economic ladder: the short-term pain of immigration is generally offset by long-term gains.

That’s easy to lose sight of amid all this immigrant bashing. To be sure, Republicans claim to be all in favor legal immigration; it is only illegal immigration they claim to oppose. But the reality is that a lot of undocumented immigrants are also making a positive contribution to this country. In any case, the distinction between legal and illegal quickly gets lost in the debate, when a lot of the leading Republicans sound like they’re simply aggravated by too many foreigners coming here.

Keep it up, guys, if you want to lose the votes of Latinos—and those of our newest CEO’s.

As the Republican presidential candidates compete to see who can bash immigrants the hardest, Citigroup has just appointed Vikram Pandit, a super-smart financier born in India, to be its CEO. As this New York Times article notes, he joins thirteen other CEO’s of Fortune 500 companies who were not born in this country: “The head of the Altria Group was born in Egypt, for example. PepsiCo’s is from India, the Liberty Mutual Group’s is a native of Ireland, and Alcoa’s was born in Morocco.”

Perhaps one of the GOP candidates can cut a TV spot bemoaning lost jobs for American plutocrats and promising that in his administration WASP’s will regain their rightful places atop the corporate hierarchy.

Actually, the fact that the top management jobs are no longer the exclusive preserve of the proverbial man in the gray flannel suit is good news. It means that American companies are doing a great job of drawing on talent from all around the world. In the short term, of course, that can be disorienting and aggravating for the clubby golfing types who had come to look on top-level corporate jobs as theirs almost by divine right. In the long term, however, it means that American companies will be more competitive than insular rivals in other countries, thereby making this country even more prosperous and vital. Something similar is happening on lower rungs of the socio-economic ladder: the short-term pain of immigration is generally offset by long-term gains.

That’s easy to lose sight of amid all this immigrant bashing. To be sure, Republicans claim to be all in favor legal immigration; it is only illegal immigration they claim to oppose. But the reality is that a lot of undocumented immigrants are also making a positive contribution to this country. In any case, the distinction between legal and illegal quickly gets lost in the debate, when a lot of the leading Republicans sound like they’re simply aggravated by too many foreigners coming here.

Keep it up, guys, if you want to lose the votes of Latinos—and those of our newest CEO’s.

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